China’s Great Migration: How the Poor Built a Prosperous Nation by Bradley M. Gardner

China’s rise in a generation from poverty and isolation to
become a global economic power would have been impossible without
the mass migration of people from the countryside to the city. In
China’s Great Migration, Bradley Gardner describes the
role that this unprecedented movement of people has played in “the
greatest development story in human history.”

Market reforms in agriculture, trade, and industry all played
major roles in China’s emergence from the legacy of Chairman Mao,
but the most underappreciated reform was the growing freedom of the
Chinese people to move to cities to better their condition. Gardner
tells this important story with sound analysis but also with
firsthand accounts from his time on the ground in China.

The movement begins with the agricultural reforms of the late
1970s, which freed millions of Chinese workers from the shackles of
collective farming. The rural laborers then migrated to the cities
to work in the factories that had begun to produce labor-intensive
goods for global markets. As a result, Gardner writes, “Between
1978 and 2012, the population of China’s cities grew by half a
billion people, swollen by more than 260 million economic migrants
moving to urban centers to look for new opportunities.”

From 1980 to 2010, the population of Beijing rose from 9 million
to 21 million, Shanghai from 11 million to 20 million, and most
incredibly Shenzhen, the area surrounding Hong Kong, from 300,000
to 10 million. New York and London had also seen their populations
swell during the industrial revolution, but not by nearly so much
nor during such a short span of time.

The most direct impact of this great migration of people was on
the migrants themselves. By moving to the city, their output and
incomes rose immediately by 500 percent. The factory work was hard
and the conditions far below western standards, but “for China’s
poor, the difference is life changing,” Gardner observes. “An extra
8 to 9 dollars a day is the difference between struggling to buy
clothes and struggling to buy a phone; between an empty field and a
flush toilet; between illiteracy and a technical education.”

For China as a nation, the great migration has been responsible
for an estimated 20 percent to 33 percent of its economic growth
since reforms began. That amounts to an additional $1.1 trillion in
economic output over a 20-year period. The number of people in
China living in absolute poverty fell from 1981 to 2011 by more
than 750 million, creating a middle class that has fueled China’s
rise as the world’s largest consumer market for automobiles, luxury
goods, and smartphones.

The great migration was not a deliberate part of the
government’s development strategy. In fact, as Gardner documents,
China’s communist authorities had traditionally tried to thwart the
movement of its citizens. Beginning in 1951, the Chinese government
enforced a household registration system known as hukou,
which required residents to obtain the permission of police before
they could move. Under Mao, hukou was “uniquely
disastrous,” trapping peasants in the countryside just as the Great
Leap Forward of 1958-62 was starving them of food.

As reforms took hold in the 1980s, China’s government generally
looked the other way as tens of millions of technically illegal
migrants moved to the cities. It was only in August 2003 that the
hukou system was effectively abandoned when then Prime
Minister Wen Jiabao abolished the accompanying law that allowed
police to detain and repatriate migrant workers. “With one
announcement,” Gardner writes, “the Chinese people were now free to
move around their country without needing government
permission.”

Remnants of the hukou system remain in place, but as a
soft rather than a hard restraint. Many migrant workers still live
a kind of second-class existence, free to work but not able to tap
into government services such as education for their children that
are available to more long-time residents. Even so, the large
majority are still much better off for moving.

Gardner’s book is more than an academic work. A veteran of the
Foreign Service and the Economist Intelligence Unit, he speaks
Chinese and has lived and traveled extensively in China. He
interviews migrants themselves and describes telling scenes such as
the train stations crowded with Chinese workers headed home to the
countryside during the Chinese New Year. This is a bottom-up story
of the Great Migration.

Another strength of the book is how Gardner links the great
migration to other reforms. For example, fiscal reforms in 1994
allowed the central government to collect more revenue but left
local governments responsible for schools, local infrastructure,
and social spending. To raise revenue, local governments engaged in
land expropriation, undercompensating farmers for land on the
fringes of urban areas and then reselling it at huge profit to
developers to build industrial sites and high-rise apartments.
While unjust, this system did open up land for development in a way
that was accommodating to the incoming migrants.

For China, the great migration made possible its rise to
middle-income status, but it has also covered up China’s
demographic decline and its inefficient use of capital. Because of
its one-child policy, China’s total working age population has
already begun to decline. The internal movement of people peaked in
2007 and is expected to run its course by the mid-2020s, when there
will be no more excess labor from the rural sector to fuel its
industrial growth.

Thus time is running out on China’s current model. “More people
have migrated under the Great Migration than ever before in history
but rural migrants are still a limited resource,” Gardner writes.
“China has yet to make the transition from an economy based on
mobilizing labor to an economy based on capital efficiency. If it
fails to make this transition in the next decade, it may run out of
room to grow.”

Gardner notes that even with all its reforms and progress,
China’s economy remains burdened by too much state intervention. To
avoid a hard landing, “China needs to finish the reforms that it
started more than thirty years ago. That means introducing full
rural land rights, privatizing [state-owned enterprises], ending
the hukou system, and most importantly making sure that
local governments have legitimate means to pay for legitimate
costs. Absent these reforms, growth in China could quickly stagnate
as debt and demographics take their revenge.”

For the rest of the world, China’s great migration reminds us
once again that the freedom to pick up and move from one place to
another is essential for human happiness and progress. This can be
the freedom to move from a poor to a rich country, or from the
countryside to the city within a country. In both cases, workers
can experience a sharp increase in their productivity, benefiting
themselves and their families while boosting total economic
output.

“Giving people the opportunity to cross borders and pursue
economy opportunities creates wealth for migrants, those around
them, and the global economy. The largest barrier to migration is
political, but political opinions can change rapidly,” Gardner
concludes. “Fifty years ago, a common labor market in Europe would
have been unthinkable; there is no reason that changes on a similar
scale could not happen globally over the next fifty years.”